Facebook buying Instagram for $1B

SAN FRANCISCO – Facebook has agreed to buy the hugely popular photo-sharing app maker Instagram for about $1 billion in cash and stock in a blockbuster deal reverberating around Silicon Valley.

It's about the only thing that could top Justin Bieber on Instagram.

Facebook's chief executive and founder made the announcement Monday on Facebook in a post that has already generated tens of thousands of likes. He has pledged to allow Instagram to remain independent.

"For years, we've focused on building the best experience for sharing photos with your friends and family. Now, we'll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests," Mark Zuckerberg wrote. "We believe these are different experiences that complement each other. But in order to do this well, we need to be mindful about keeping and building on Instagram's strengths and features rather than just trying to integrate everything into Facebook.

"That's why we're committed to building and growing Instagram independently. Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people."

Zuckerberg noted that the acquisition marked a milestone for Facebook - and hinted that it might be the last of its size and scope.

Facebook has mainly targeted smaller companies in its acquisitions, spending no more than tens of millions of dollars on each, and usually just to get the raw talent, not the technology. The 2-year-old Instagram in San Francisco has just 13 employees. They didn't hear about the deal until co-founder Kevin Systrom called an all-hands meeting Monday morning.

"It's the first time we've ever acquired a product and company with so many users. We don't plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together."

The deal is expected to close later this quarter. Instagram had been rumored to be close to a new funding round that would have valued the startup at $500 million. It had turned down a previous offer from Facebook.

Former Facebook executive Matt Cohler with Benchmark Capital is a major investor in Instagram.